This document discusses state initiatives to address the dropout problem by presenting an overview of programmatic strategies states are using to meet the needs of dropout-prone youth and school dropouts and strategies to finance these efforts. It provides a framework for understanding current state programs and then presents an overview of current programs. A section on funding of current state dropout prevention programs distinguishes state dropout prevention and recovery programs on the dimensions of general program strategies, grants strategies and funding mechanisms, and program services. It distinguishes three basic programs and funding strategies: grants for demonstration programs or model programs, grants for research and dissemination, and grants for regular programs. Dropout services provided by state programs are classified as focusing on academic improvement, attendance improvement, personal and social adjustment, and career preparation and job training. The remainder of the report summarizes key features of several state dropout programs currently being conducted in California, Colorado, Florida, Massachusetts, New York, North Carolina, and Washington. Other state programs designed by Alaska, Minnesota, and New Jersey to meet the needs of high-risk youth and prevent them from dropping out are briefly reviewed. Planned programs in Connecticut and Oregon are also discussed. (NB)